Course Outline 

Module 1: Introduction to Derivative Markets and Instruments

• Overview of financial derivatives

• Types of derivatives: forwards, futures, options, swaps

• Market participants and their motivations

• Exchange-traded vs. over-the-counter (OTC) derivatives

• Regulatory framework and market infrastructure

• Case Study: Role of derivatives in financial markets during periods of volatility

Module 2: Forwards and Futures – Pricing & Applications

• Structure and characteristics of forward contracts

• Futures markets, contract specifications, margining and marking-to-market

• Pricing forwards and futures using cost-of-carry models

• Arbitrage relationships and cash-and-carry strategies

• Hedging with forwards and futures: currency, interest rate, commodity exposures

• Practical Exercise: Calculating forward prices and futures hedge ratios

Module 3: Options – Concepts, Pricing & Strategies

• Types of options (calls, puts) and option markets

• Key option variables: moneyness, intrinsic vs. time value

• Option pricing models: binomial model and Black-Scholes overview

• The Greeks: delta, gamma, theta, vega, rho

• Options strategies: spreads, straddles, strangles, collars

• Case Study: Using options to manage downside risk

Module 4: Swaps and Structured Derivative Products

• Structure of interest rate swaps, currency swaps, and commodity swaps

• Swap pricing fundamentals and valuation principles

• Applications of swaps for hedging and yield enhancement

• Overview of structured products: credit derivatives, FRAs, caps and floors

• Practical Exercise: Valuing a simple interest rate swap

Module 5: Derivative Risk Management and Strategy Integration

• Types of risk in derivative use: market, credit, liquidity, model risk

• Risk measurement tools: VaR, stress testing, scenario analysis

• Derivative documentation (ISDA, CSA)

• Integrating derivative strategies into portfolio management

• Ethical and governance considerations in derivative trading

• Simulation: Designing a hedging strategy for a real-world financial scenario